Already off the cliffJobs generate incomes. It is a common theory that incomes are the result — and reward — for labor. The policy of the Moon Jae-in administration to increase incomes to generate economic growth is the opposite theory. That is like expecting the carriage to pull the horse. It is no wonder that the carriage is not moving. Yet the government whips at the horse in vain, causing true destruction to the livelihoods of our lowest-income class, something which has been happening for over 18 months. A policy specifically designed to help low-wage people is ruining their lives. The damage by the income-led growth policy is no longer news. What is really worrisome is the stubbornness of the government even as it sees the toll on the most vulnerable class, which has lost hourly and part-time jobs by the hundreds of thousands. Household income data for the third quarter should be the latest reality check. The bottom 20-percent increasingly live off government handouts and social welfare allowances as they earn little or nothing due to scarce job opportunities after the minimum wage went up. The government has been repeating a vicious cycle of spending massive amounts of money to compensate for the job losses created by its policy.
The double-digit hike in the minimum wage wiped out jobs that pay the minimum wage. The wholesale, retail, restaurant and lodging, and maintenance and rental segments shed 290,000 jobs this year. Self-employed businesses have cut temporary hires because they cannot afford their wages. The families in the bottom 20-percent income group earned 478,900 won ($423) on average a month from working in the third quarter, 140,000 won less than a year ago. State handouts increased by 100,000 won to 604,700 won. The data looks more like Greece and some Latin American economies that have gone bankrupt due to profligate welfare spending.
The more the poor rely on the state for livelihood, the worse the wealth gap becomes. The government has spent 54 trillion won to create jobs. Yet, the bottom 20 percent’s income fell 7 percent on year to 1,317,600 won, whereas the income for people in the top 20 percent bracket increased 8.8 percent to 9,735,700 won. The income gap is now the biggest in 11 years. The Blue House has promised improvements by the end of the year. But matters are getting worse. The Organization for Economic Cooperation and Development has projected Korea’s employment woes to continue until 2020. The government must end its income-led growth policy immediately — and somehow pull us back onto the cliff.
JoongAng Sunday, Nov. 24, Page 34